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By whom and how is the amount of new currency printed each year controlled? Thanks, R. L.

Wall Street is buzzing about the greenback's ongoing decline against foreign currencies, so your question couldn't have arrived at a better time. But before delving into the dollar's relative value, let's brush up on some civics.

The production and distribution of currency notes and coins fall under the domain of the

Treasury Department

. Under the Treasury's auspices, the

U.S. Mint

is responsible for producing coins and the

Bureau of Engraving and Printing

produces currency notes.

Both bureaus are mandated to make coins and currency in quantities sufficient to fill the "needs of the public," according to the Treasury.

How many pennies does the public need? Well, that's decided, for the most part, by the

Federal Reserve

.

To assure smooth and sufficient flow of coins, the Mint and the Federal Reserve use long-range economic indicators and historic seasonal effects, such as Christmas, to decide how many coins to manufacture. For those wondering how the coins arrive at their destinations, the Department of Treasury says armored carriers usually transport 10-cent coins, quarter-dollar coins and half-dollar coins, while tractor-trailer trucks transport one-cent coins and five-cent coins.

When it comes to those crisp dollar bills in your pocket, the process starts every summer, when the currency departments at each of the 12 Federal Reserve banks list their currency needs, and then place orders with the Comptroller of the Currency. After reviewing the requests, the comptroller forwards them to the BEP, which then prints the appropriate denominations of currency notes bearing the seal of the Federal Reserve bank placing the order. (To see which Fed bank ordered the $1 bills in your wallet, just look to the left of George Washington's face.)

In terms of dollar amounts, the BEP -- which is headquartered in Washington, D.C., but also runs a satellite production facility located in Fort Worth, Texas -- produces approximately 37 million currency notes each day with a face value of about $696 million, and 45% of these notes are of the $1 denomination, according to the Treasury Department Web site. About 95% of the currency notes printed each year are used to replace notes that are already in circulation.

The Federal Reserve bank pays only the cost of producing the notes, which are, in actuality, claims on the assets of the issuing Federal Reserve bank and liabilities of the government. The law says that each Federal Reserve bank must hold collateral that equals at least 100% of the value of the currency it issues. Most of that collateral is in U.S. Government securities owned by the Federal Reserve System, but it also includes gold certificates and other things like promissory notes.

Dollar vs. Yen vs. Euro

Those are just the basics behind the buck. When it comes to Wall Street, however, good old supply and demand makes all the decisions.

For example, the dollar recently fell to a three-month low against the Japanese yen after the Group of Seven most industrialized countries put pressure on China to let its currency, the yuan, appreciate. Japan's currency strengthened to 116.66 per dollar on the news, up from 117.54 (Or in other words, it takes less yen to buy a dollar). A stronger yuan vs. the dollar would make imports cheaper for China, while Chinese goods would be more expensive abroad.

The dollar also dropped after Russia's finance minister questioned the dollar's stability as the world's reserve currency. And comments from Sweden's Riksbank also took their toll. The country's central back said last week it planned to boost euro holdings at the expense of U.S. assets. The dollar weakened to $1.2346 per euro and is now down over 4% after starting the year at $1.19 per Euro.

The dollar may be slipping as of late relative to other currencies, but don't convert those greenbacks to euros just yet. According to the International Monetary Fund, the dollar is still the currency of last resort, making up close to 66% of the world's reserves, while the Euro's share is around 24%.